Companies have to trade fairly with customers

FRIDAY, SEPTEMBER 9: In Bermuda there are certain laws that exist to make sure that traders deal fairly with consumers. 

They exist to protect the consumer, but businesses also benefit because these laws outlaw disreputable business practices, encourage fair competition between businesses and offer businesses better protection from anti-competitive practices

If a business does not abide by these laws, awards of damages can be made against it, hefty fines can be levied and/or key personnel can face imprisonment.

One of these laws is the Sale of Goods Act 1978 (as amended 2002) and here are a few questions and answers that will guide traders on how to conduct business with consumers.

Q: What does the Act do?

A: Primarily, the Act sets out the law on sales of goods in Bermuda. It governs whether the goods conform to the contract. The contract for the sale of goods is between the seller and the consumer and provides that:

• Goods should be of satisfactory quality, i.e., they should meet the standards that a reasonable person would regard as satisfactory.

• Goods should be as described.

• The quality of the goods includes their state and condition and certain aspects of the quality:

a) fit for all purposes for which goods of the kind are supplied;

b) appearance and finish;

c) freedom from minor defects;

d) safety and durability.

• Goods should be reasonably fit for any particular purpose that was made known to the retailer at the time of purchase.

Goods would not conform to the contract if they failed to work (were faulty) immediately from the time of sale. 

Also goods might not conform to contract if they failed to work later or even after a number of years due to an inherent fault (one that could be said to exist at the time of contract).

Q: How does the Act affect my business?

A: The Act may affect your business:

• If you are in breach of the contract and you do not compensate the consumer.

• If the consumer is in breach of the contract and does not compensate you.

If a product that was faulty at the time of sale is returned to the retailer, the consumer is legally entitled to:

• A full refund if this is within a reasonable time of the sale or

• A reasonable amount of compensation (or “damages”) for up to six years from the date of sale.

This does not mean that all goods have to last six years. 

It is simply the limit for making a claim in respect of a fault that was present at the time of sale.  It may be the case that a full refund is not the reasonable option because the consumer will have enjoyed some benefit from the product before the problem appeared. 

It is important to remember that as the contract was made between the seller and the consumer, it is the seller and not the manufacturer that the consumer can sue for breach of contract.

Key Facts

Whenever goods are bought they must conform to contract i.e., they must be of satisfactory quality, as described and fit for purpose.

Aspects of quality include fitness for purpose, freedom from minor defects, appearance and finish and durability and safety.

It is the seller, not the manufacturer, who is responsible if goods do not conform to contract. If goods do not conform to contract at the time of sale (are faulty), purchasers can request their money back ‘within a reasonable time’. (This is not defined and will depend on circumstances).

If part of the goods does not conform to contract, then the consumer can reject those goods that do not conform and keep those that do, and thus be entitled to compensation for those goods that don’t.

For more info please visit the Department of Consumer Affairs’ website, www.ca.gov.bm, for more detailed information on the Sale of Goods Act 1978 (as amended 2002).

Honey Adams is the education officer for the Department of Consumer Affairs.